nominal GDP

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Nominal GDP is defined as the value of all the goods and services produced in a country during a specified period of time that has not been adjusted for inflation. Any GDP figure that does not account for changes in the value of money can be misleading because GDP will appear higher than it actually is. If the nominal GDP gains 8 percent and inflation for the period has been 4 percent, the real GDP has increased only 4 percent. A GDP deflator is calculated by dividing the nominal GDP by the real GDP, and is used to understand the overall level of inflation or deflation in the economy.

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